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Electronic Commerce (E-Commerce) :

3/9/01 EMTM 553 3 Electronic Commerce (E-Commerce) Commerce refers to all the activities the purchase and sales of goods or services.
Marketing, sales, payment, fulfillment, customer service
Electronic commerce is doing commerce with the use of computers, networks and commerce-enabled software (more than just online shopping) .Electronic commerce, commonly known as (electronic marketing) e-commerce or eCommerce, consists of the buying and selling of products or services over electronic systems such as the Internet and other computer networks. The

Brief History :

3/9/01 EMTM 553 4 Brief History 1970s: Electronic Funds Transfer (EFT)
Used by the banking industry to exchange account information over secured networks
Late 1970s and early 1980s: Electronic Data Interchange (EDI) for e-commerce within companies
Used by businesses to transmit data from one business to another
1990s: the World Wide Web on the Internet provides easy-to-use technology for information publishing and dissemination
Cheaper to do business (economies of scale)
Enable diverse business activities (economies of scope)

The Main Elements of E-commerce :

3/9/01 EMTM 553 10 The Main Elements of E-commerce Consumer shopping on the Web, called B2C (business to consumer)
Transactions conducted between businesses on the Web, call B2B (business to business)
Transactions and business processes that support selling and purchasing activities on the Web
Supplier, inventory, distribution, payment management
Financial management, purchasing products and information

Web-based E-commerce Architecture :

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3/9/01 EMTM 553 16 .Vary with the size of the organisation, for example:
.companies might want to build a Web site to encourage customers to do business using existing channels.
A site offering only product or service information is less costly do design and implement
.Larger companies that might want to build sites that offer transaction handling, bidding, communication and other capabilities have to pay much more Types of Objectives

SMART Objectives :

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3/9/01 EMTM 553 18

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3/9/01 EMTM 553 19 Real process of Ecommerce

Example of Objectives :

Example of Objectives

Linking Objectives to Business Strategy (III) :

Linking Objectives to Business Strategy (III) E-commerce can inspire businesses to partake in activities such as:
Purchase products and services
Manage supply chains
Operate auctions
Build virtual communities
However, these can not be done in an ad hoc manner. It is important to measure the benefit and cost of each activity

Measuring Benefit :

Measuring Benefit Some benefits are tangible and easy to measure, for example increase sales, decrease cost
Others are intangible thus difficult to measure, for example increased customer satisfaction
Managers need to try to set objectives that are measurable even for intangible benefits
E.g. increased customer satisfaction might be measured by counting the number of first-time customers who return to the Web site and buy

Measuring Benefit (I) :

Measuring Benefit (I)

Measuring Benefit (II) :

Measuring Benefit (II)

Managing Cost :

Managing Cost IT projects are often difficult to estimate and control
E.g. web development technologies change rapidly, thus it is difficult for managers to estimate cost
These cost include hardware and software
Even though hardware cost tend to decrease, new software often demands new hardware, thus increase cost

Change Management :

Change Management Every project involves change
Change management is the process of helping employees cope with change
Change management techniques include
Communicating the need for change
Inclusion in the change decision process
Inclusion in the planning for the change

Post-Implementation Audits :

Post-Implementation Audits A formal review of a project after it is up and running
Managers compare the the objectives, performance specifications, cost estimates, and scheduled delivery dates plans with the actuals

Application Specialist :

Account Manager :

Account Manager Keeps track of multiple Web sites in use by a project
Or keeps track of projects that will combine to make a larger Web site
The account manager supervises the location of specific Web pages and related software installations as they are moved from test, to demonstration, to production
In smaller companies they handle the project and account management functions

Staffing for E-Commerce :

Staffing for E-Commerce The internal team must determine the staffing needs for the e-commerce initiatives
The general areas of staffing required are:
Business, project and account managers
Application specialists
Web programmers and graphic designers
Content creators, managers or editors
Customer service
System, and database administration
Network operations

New Methods for implementing Partial Outsourcing :

New Methods for implementing Partial Outsourcing In the past five years new ways of implementing partial outsourcing have been creating
Incubators
Fast venturing

Internal Incubators :

Internal Incubators Internal incubators are incubators that are set up by a company (using internal staff),
e.g. Kodak internal venturing program of the 1980s
Most of these were unsuccessful because employees found it difficult to maintain an entrepreneurial spirit when what ever they developed would be taken away and controlled by the parent company

Incubators (I) :

Incubators (I) When the company grows and can obtain venture capital financing or can publicly offer stock, the Incubator sells all or part of its interest and re-invests in a new incubator candidate
Example:
Idealab (www.idealab.com/) was one of the first Internet incubators and helped www.carsdirect.com/home

Incubators :

Incubators A company that offers start-up companies a physical location with offices, accounts and legal assistance, computers, and Internet connections at a very low monthly cost
Some also offer seed money, management advice an marketing assistance
In exchange the company gives 10-50% ownership of the company to the Incubator

Selecting a Web Hosting Service (I) :

Selecting a Web Hosting Service (I) The most important factors to use when evaluating a hosting service are:
Functionality
Reliability
Bandwidth and server scalability
Security
Backup and disaster recovery
Cost

Selecting a Web Hosting Service :

Selecting a Web Hosting Service The internal team should be responsible for selecting the ISP to host the site
For smaller e-commerce projects teams can consult an ISP dictionary (for ISPs, web hosting services or ASPs (application service provider))
Larger companies should use consultants or other firms that rate service providers

Strategies For Developing E-commerce Web Sites :

ROI Problems :

ROI Problems If managers rely only on ROI incorrect decision may be made
Due to biases towards short term cost and benefits rather than long term

ROI Hidden Benefits Example :

ROI Hidden Benefits Example CISCO systems created an on-line customer forum to discuss product issues
The intended benefits were to
Reduce customer service costs
Increase customer satisfaction regarding the availability of product information
Additional (hidden) benefit
Cisco engineers were able to get feedback on new products

Return On Investment (ROI) :

Return On Investment (ROI) Return on Investment techniques measure the amount of income (return) that will be provided by a specific expenditure
ROI requires that all costs are stated in a dollar amount
ROI focuses on benefits that can be predicted
Many benefits are often hidden
ROI tends to emphasize short-term benefits over long term benefits

Comparing Benefits to Costs :

Change Management :

Change Management Every project involves change
Change management is the process of helping employees cope with change
Change management techniques include
Communicating the need for change
Inclusion in the change decision process
Inclusion in the planning for the change

Web Site Costs :

Web Site Costs The cost required for a large company to build an entry-level e-commerce site is $1 million
79% is labour cost
10% software cost
11% hardware cost
Source: International Data Corporation and Gartner Inc.

Change Management (I) :

Change Management (I) If change is not properly managed, employees feel
Uncomfortable
Inadequate
Stressed which leads to reduced work performance
Unable to do the job properly
Powerless

Linking Objectives to Business Strategy (II) :

Linking Objectives to Business Strategy (II) E-commerce can inspire businesses to partake in activities such as:
Build brands
Enhance existing marketing programs
Sell products and services
Sell advertising
Develop a better understanding of the customer’s need
Improve after sales support and service

Linking Objectives to Business Strategy (I) :

Linking Objectives to Business Strategy (I) Businesses can use downstream strategies to improve the value that the business provides to customers
Or can pursue upstream strategies that focus on reducing cost or generating value by working with suppliers or inbound shipping and freight service providers

Linking Objectives to Business Strategy :

Linking Objectives to Business Strategy After identifying objectives a company must
identify business strategies that will help to realise these objectives
E.g. a small company’s object might be to become a global player within a year and as a result one of its activities is to build a brand